Running a business requires that you sometimes take loans. You need the additional cash for buying inventory or making improvements. In most cases, you are confident of repaying back the money borrowed. However, events can sometimes take a twist.
Along the way, difficulties emerge. The number of clients fluctuates, competitors gain an edge over you, sales reduce leaving you with little or no cash to finance your operations and before you know it, your enterprise starts struggling financially.
With no money coming in, you are in a cash flow problem. The threat of closing down is imminent. If you do not find a solution soon, your creditors might decide to seek legal measures. That is not a path you would like to take.
Fortunately, there is a solution. You can take the measures listed below to save your business from a possible liquidation:
Cost reduction involves identifying areas of wastage and cutting down on the same. Some of the measures you can take to minimize your expenses include:
Selling off equipment that you no longer use
Switching off power when not using a room or electronics
Subleasing excess space
Reducing your workforce (in extreme cases)
Introducing rotational shifts where employees work for half a day
Try and encourage your employees to get into the habit of saving on electricity and paper usage.
Negotiate with creditors
By contacting the people you owe money, you may get Creditors relief. Inform your lenders of your current predicament. Request them to extend the repayment period by a few months. You could also negotiate for an adjustment of interest.
Try combining all your loans such that you only have one creditor to handle. You can approach your bankers and request for a loan to help offset debt. After that, you settle outstanding dues and remain with one loan to repay. Besides, the bank can also act as your debt collector and hasten the repayment process.
Entice your customers
You must continue attending to customers. They are the ones that bring you money through the purchase of your product or service. Entice them to pay you more quickly through measures such as:
As the cash trickles in, you get to achieve two objectives. First, you increase sales. Secondly, your revenue goes up, giving you the much-needed funds to pay off debt.
Seek professional help
Once you notice that your business has fallen on difficult times, do not panic. Continue with operations as was the case before. Meanwhile, seek the advice of a financial professional. Ensure that you keep your books in order as these will serve as the basis for getting to the root of the problem.
Business hardship affects all enterprises. By reducing expenses, you remain with cash to meet pressing obligations. Speaking to creditors buys you crucial repayment time. Debt consolidation compacts everything that you owe. Meanwhile, incentives to customers encourage them to pay up promptly. You must not give up the resolve to get your business back on its feet.